Integrating Seasonal Forecasts and Insurance for Adaptation among Subsistence Farmers : The Case of Malawi
Climate variability poses a severe threat to subsistence farmers in southern Africa. Two different approaches have emerged in recent years to address these threats: the use of seasonal precipitation forecasts for risk reduction (for example, choosi...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/06/9577543/integrating-seasonal-forecasts-insurance-adaptation-among-subsistence-farmers-case-malawi http://hdl.handle.net/10986/6873 |
| Summary: | Climate variability poses a severe
threat to subsistence farmers in southern Africa. Two
different approaches have emerged in recent years to address
these threats: the use of seasonal precipitation forecasts
for risk reduction (for example, choosing seed varieties
that can perform well for expected rainfall conditions), and
the use of innovative financial instruments for risk sharing
(for example, index-based weather insurance bundled to
microcredit for agricultural inputs). So far these two
approaches have remained entirely separated. This paper
explores the integration of seasonal forecasts into an
ongoing pilot insurance scheme for smallholder farmers in
Malawi. The authors propose a model that adjusts the amount
of high-yield agricultural inputs given to farmers to
favorable or unfavorable rainfall conditions expected for
the season. Simulation results - combining climatic,
agricultural, and financial models - indicate that this
approach substantially increases production in La Niña years
(when droughts are very unlikely for the study area), and
reduces losses in El Niño years (when insufficient rainfall
often damages crops). Cumulative gross revenues are more
than twice as large for the proposed scheme, given modeling
assumptions. The resulting accumulation of wealth can reduce
long-term vulnerability to drought for participating
farmers. Conclusions highlight the potential of this
approach for adaptation to climate variability and change in
southern Africa. |
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